I see you posted your estimate of 60M 28nm LTE QCOM chipsets for the December qtr. (on APPL board)

I’ve been attempting to make some sense of this connecting the dots between Q’s CC notes and the analysts comments. I’m guessing closer to 75M LTE chipsets (MSM /MDM) in the Dec qtr using 40% of Q’s total (up from 33% at FY12 ye).

Good to see the analyst community starting to make mention of MDM 9615 as I believe after Q’s recent earnings CC we speculated Apple and MDM 9615 as the primary reason for Q’s under estimating 28nm demand (although they cannot mention anything APPL related)

It’s also impossible to estimate the mix between MSM 8960 and MDM 9615 and that could make for “interesting” chipset ASP comparisons in the upcoming earnings reports due to the significant difference in pricing. I believe you / I / Modoff agree that the high end MSMs (8960) ASPs fall between $30 -$35, with the MDMs (w/o APs) in the $16- $20 range. At present with these state of the art MDM still priced at or above QCT’s composite ASP this presents no problem.

Looking at the various iPhone 5 unit estimates, it appears Q’s LTE quarterly chipset estimates have some margin to support their other device partners in addition to Apple.

I see you posted your estimate of 60M 28nm LTE QCOM chipsets for the December qtr. (on APPL board)

I’ve been attempting to make some sense of this connecting the dots between Q’s CC notes and the analysts comments. I’m guessing closer to 75M LTE chipsets (MSM /MDM) in the Dec qtr using 40% of Q’s total (up from 33% at FY12 ye).

FWIW, I have been using that 60 million number as a conservative low-end estimate based on 1/3 of 180 million MSM shipments. Assuming current economic conditions, my midpoint would be higher than that. Playing with some of the numbers, a 70-75 million range seems about right.

with the MDMs (w/o APs) in the $16- $20 range.

My assumption would be that the MDM9x15 would actually fall a bit higher than that range considering the inclusion of LTE/TD-LTE and the fact that it is 28nm. OTOH, Apple's buying power will likely bring that down a bit.

One way to look at it would be that I would expect that the ASP of the MDM that Apple uses in the 5 will be higher than the chip in the 4S at launch.

Hopefully, we'll see a LTE MDM with integrated BT/WiFi/GPS for the iPhone 6 in 2013 :-).

Qualcomm is hiring AMD's former CTO Eric Demers to help the company produce a blockbuster mobile graphics chip. It needs the silicon for its big push for smartphone dominance (and tablets running Windows RT) in the face of strong competition from Imagination Technologies' Series 6 PowerVR and NVIDIA's Tegra 3. Demers' first job will be to merge Qualcomm's in-house Adreno team with ATI's Imageon mobile graphics chip team, which AMD flogged off for $65 million back in 2009 -- a move Sunnyvale is probably regretting now that it too is trying to get its hardware into mobile devices, unless it included a do-over clause in the sales contract.

SNIP: ( Back to Apple Facebook's historic IPO is now in the rearview mirror, and some had speculated that investors were rotating dollars out of Apple last week to invest in the social networker. Facebook shares got crushed today, as the offering has mostly fizzled out amid its lofty valuation.

! After lagging for weeks, Apple (Nasdaq: AAPL ) sure enjoyed a nice day today. Shares traded as high as $561.54, a gain of more than $31 from Friday's close. They closed within cents of that high. On a percentage basis, that outperformed the broader market by several points.

Let's look what's giving Apple bulls courage today.

Pay no attention to this Fool As much as I'd like to think that my words can move a $500 billion company that trades an average of 24 million shares a day, I doubt that my article over the weekend about how absurdly cheap Apple has become over the past few weeks is the cause.

While Apple's depressed prices and low valuation relative to its earnings power and the broader market may mean shares are locked and loaded, there still needs to be a catalyst for a spark of inspiration.

Good old Gene Longtime Apple analyst and bull Gene Munster of Piper Jaffray is out with a research note to dispel fears that supply constraints at baseband provider Qualcomm (Nasdaq: QCOM ) may hurt the iPhone maker in any meaningful way. The wireless chip specialist's 28-nanometer baseband chips are widely expected to be a key ingredient in this year's iPhone to serve up 4G LTE speeds. Apple uses a different flavor baseband modem from Qualcomm in the third-generation iPad to facilitate 4G LTE.

While Qualcomm is seeing some 28-nanometer supply constraints from contract manufacturer Taiwan Semiconductor Manufacturing, Munster is confident that Apple will be able to lock down the supply that it needs (as usual) and gets "favorable treatment in terms of access to 28-nanometer inventory." Apple is no stranger to having certain scarce components cause manufacturing bottlenecks, such as the Retina Display in the new iPad.

The company has experience managing launches and ramping up production as quickly as possible, so Apple should be relatively insulated from the impact of any shortages that Qualcomm is facing. Munster also believes that even if Apple is faced with shortages, prospective buyers would simply delay purchases instead of defecting to a competing smartphone and those sales would be booked in the following quarter, especially since this year's iPhone will probably be the most meaningful upgrade in years. He added, "We believe the iPhone 5 will represent the biggest consumer electronics product launch of 2012 as well as the biggest device upgrade cycle in smartphone history."

Munster is modeling for 49 million iPhone unit sales in the calendar fourth quarter, and he thinks there's an 80% shot that Apple will hit his target. He also went ahead and reiterated his "overweight" rating and $910 price target, representing 72% upside from Friday's close.

Good old Goldman Another concern that's been weighing on shareholders is that wireless carriers are simply fed up with forking over juicy subsidies, with margins going out the door along with them. That's one reason Apple's original iPhone partner, AT&T (NYSE: T ) , is shifting its marketing weight to promote Nokia's new Lumia 900 as its new exclusive flagship phone.

Goldman Sachs analysts are questioning this fear, saying that carriers are unlikely to make "material changes to retail prices for leading smartphones," considering their focus on growing smartphone subscribers. Analyst Bill Shope wrote, "We continue to believe that reductions in smartphone subsidies are unlikely to significantly impact the Apple model or the longer-term value of the platform."

Even as carriers are creating disincentives to upgrade, such as fees or extended upgrade timeframes, Shope actually sees this trend as benefiting Apple. After all, if consumers are looking at a fixed upgrade fee and they know they'll be using that device for a longer period of time, why not go with the best in breed?

I've always looked at basic game theory as the reason carriers have little to no choice but to pay up, especially now that the three largest carriers offer the iPhone. One carrier can't revolt because it would just send all those iPhone customers to a competing carrier, a risky bet that none is probably willing to make.

Even if AT&T and Verizon (NYSE: VZ ) were to collude and mutiny, Sprint Nextel (NYSE: S ) has already made it perfectly clear that it will do whatever it takes to offer the iPhone. That would render a joint threat from Ma Bell and Big Red less effective, especially as AT&T knows firsthand how powerful an exclusive grip on the iPhone can be.

Back to Apple Facebook's historic IPO is now in the rearview mirror, and some had speculated that investors were rotating dollars out of Apple last week to invest in the social networker. Facebook shares got crushed today, as the offering has mostly fizzled out amid its lofty valuation.

Looks like those Facebook dollars are coming right back to Apple.

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Fool contributor Evan Niu owns shares of Verizon Communications, Apple, and AT&T, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Qualcomm and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Goldman Sachs Group and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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Report this Comment On May 21, 2012, at 11:06 PM, dsachdev wrote:

I think that this article fails, because there is no mention of options expiration in here - that coupled with the "Sell in May and Go Away" plus the timing of the Apple earnings and test of much lower levels prior to that have to be factored into why we are finally moving back up.

The answer given here seems to be for the non-savvy investor.

Report this Comment On May 21, 2012, at 11:10 PM, TMFNewCow wrote:

dsachdev,

I'm assuming you buy into the theory that the options market manipulates underlying stock prices?

-- Evan

Report this Comment On May 21, 2012, at 11:21 PM, MrSmith210 wrote:

This article mentioned 3 key topics, granted none of which involved options. But as an options trader, you are surely aware that the options crowd is much smaller in terms of traders, so therefore it's value on the article is less important than those actually discussed.

I personally think the 100 day moving average from a technical standpoint outweighs the options argument, and that wasn't mentioned either. Take a look at the AAPL chart. It's glaring and obvious also, why the stock bounced here. Of course not to mention it's fundamentals along with the more recent arguments mentioned here.

All in all, decent article. Very simple and quick info for someone that maybe missed the market's action today for a quick recap on AAPL's big day. Not fully in depth and more arguments can be made.

The article is potentially "for" the "non-savvy" investor. But that's not to say the author wasn't aware of both of our other notable issues that may have also contributed to the pop.

Report this Comment On May 21, 2012, at 11:31 PM, Jewels100k wrote:

TMFNewCow...I do give you credit, thanks to your factually convincing article: "How Is Apple So Cheap?" for keeping me focused and stead-fast for Monday!

Based on my research I knew it was time for a bullish play for the coming week. So I bought 1 contract- the $525 strike for $14.05 on Friday 18 May. I theorized Apple would go to $550. Over the weekend I started to doubt slightly.

Sunday evening I came across your article and I felt more confident in my decision.

I needed the price for profits to be over $539.05

Monday I sold the call a little after 12 noon when the $525 call hit $25.40 premium (around $550)

A great return of $1,135. for my $1,405. play! Then I kicked myself for selling early as I watched Apple hit $561. WOW!

I'm in constant research mode and am now excited to read more of your detailed observations to keep me on track! Thank you !

Report this Comment On May 21, 2012, at 11:50 PM, dsachdev wrote:

I will agree that there are some decent points made here, but I think options expiration has a lot to do with the timing of when AAPL and the market rallied. Options traders generally trade stock as well, and they use the two in conjunction with one another. This includes the big boys that control all the money!

Report this Comment On May 22, 2012, at 12:07 AM, Dowj15k wrote:

You folks all make cogent points, but why no mention of a short squeeze? After all, the stock has been pummeled since a couple days following it's glowing earnings report. I have to think there was plenty of shorting against the box, naked shorts, and some put buying. All of which, combined with the aforementioned, surely helped propel the stock today. But with only about a half a day of short interest, and Europe a cesspool of stink, how much longer can Apple rally? Another day or two?

I don't think the stock is in for any significant run up. I do think that those who failed to sell on the post earnings decent will sell into any meaningful rally.

Report this Comment On May 22, 2012, at 12:23 AM, marketcycles79 wrote:

My friend echen at Humblestudent blog has been providing great cycle work on the markets for years. Please see his work at

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Most Popular Articles in the last seven days1.Will You Buy the Largest IPO of All Time? 2.It's Facebook IPO Day! Now What? 3.Psst! What if Facebook Is Actually Cheap? 4.Why I'm Stuck Like Glue to Silver Wheaton 5.The 1 Chart Bond Investors Need to Worry About .

SAN DIEGO, May 22, 2012 /PRNewswire/ -- Qualcomm Labs Inc., a wholly owned subsidiary of Qualcomm Incorporated (QCOM), and EvoNexus, the CommNexus San Diego incubator for startup companies in the high-tech sector, today announced their collaboration for a Qualcomm Labs' sponsored incubator program. This unique program brings together Qualcomm Labs' commitment to innovation with EvoNexus' forward-thinking, pro-bono community incubation model and opens up opportunities to further technology development in San Diego.

Qualcomm Labs, Qualcomm's internal incubator, is expanding its reach by working with EvoNexus, the nation's only free, community-backed business incubator, to establish a program within called QualcommLabs@EvoNexus.

"Qualcomm has been an active partner with CommNexus since 1998, and our new relationship with Qualcomm Labs takes EvoNexus' unique, community-supported incubator model to an entirely new level," said Rory Moore, CEO, CommNexus. "With EvoNexus' proven results, we are confident we can work with Qualcomm, a world leader in technology innovation, to help build new companies here in San Diego that will transform the local economy and energize the entire region."

Building on the success of EvoNexus, which currently has 22 companies in incubation and has helped create over 300 jobs, this new incubator program will be located in EvoNexus' Downtown and La Jolla offices. EvoNexus has already graduated six companies and raised a total of $82 million in venture funding since inception. Working alongside each other, Qualcomm Labs and EvoNexus will provide start-up tech companies the opportunity to transform ideas into businesses and products that answer the technology needs of the future.

"Qualcomm Labs is committed to transforming early stage products and technologies into viable businesses that move the wireless industry forward," said Peggy Johnson, executive vice president and president, Global Market Development at Qualcomm. "Working together with EvoNexus, we hope to extend our incubation model to harness the significant talent pool in our region to serve as a catalyst for wireless innovation."

Qualcomm Labs and EvoNexus are inviting companies to apply for participation in the program via a call for submissions, which opens today, May 22, 2012, and will close on July 3, 2012. Start-up companies and entrepreneurs in the high-tech sector who are interested in applying or receiving more information can access the application at evonexus.org.

While all entrepreneurs with interesting technology ideas are encouraged to apply, the admissions team will be paying particular attention to proposals which address the following focus areas: •Connected objects and machine to machine communications •Low cost backhaul solutions •Wireless health and education platforms •Sustainability and green technologies for portable devices

Qualcomm Labs and EvoNexus will team up to evaluate applications and will select companies for entry into the incubator program. Successful applicants will receive separate seed funding from Qualcomm Labs as well as free space accommodation within EvoNexus' fully furnished Downtown or La Jolla office locations. Admitted companies will be announced in early September 2012. During their residency, which can be up to two years, incubator companies will work on developing their products and technologies into viable businesses. They will have the chance to work with experienced Qualcomm Labs employees who will serve as mentors, and will have access to a broad network of industry experts and investment professionals who participate with EvoNexus. Over time we expect QualcommLabs@EvoNexus companies to graduate the incubator as they secure venture funding or interest from strategic investors.

About EvoNexus, a CommNexus incubator EvoNexus is an incubator for early stage high-tech companies in the San Diego area. EvoNexus, a CommNexus incubator, provides mentoring, education, facilities, utilities, introductions to domain experts and other services for startup companies before they have achieved sustainability through revenues or private funding. EvoNexus' goal is to graduate vital and sustainable companies into the San Diego community resulting in job creation. Unlike many other incubators, EvoNexus participant companies will be under no financial or IP-licensing related obligations to EvoNexus when they graduate from the incubator. It is supported through financial and in-kind donations.

"Alienware continues to be the leader in performance laptops and we appreciate that its customers are used to getting the best gaming experience possible," said Mike Cubbage, director of business development, networking business unit, Qualcomm Atheros. "The Killer Wireless-N 1202 will continue the tradition of delivering a superior gaming and real-time communication experience for Alienware laptop users by providing the best in online application performance, intelligence and control to ensure that critical online applications get the bandwidth and priority they need, when they need it."

The Killer Wireless-N 1202 offers superior performance for all online applications through Advanced Stream Detect technology, which identifies and prioritizes all network traffic. This ensures important applications that require high-speed connectivity, such as online games and video chat, get priority over less important traffic, such as incoming email or system updates. All Killer technology ships with the exclusive Killer Network Manager, giving users the power to set priorities for all network applications, increase or reduce the bandwidth each application uses, or block an application entirely – all in a unique graphical interface.

"Gamers everywhere depend on Alienware to deliver superior experiences that help them achieve that 'epic win'," said Frank Azor, general manager at Alienware. "Integrating the Killer Wireless N-1202 technology—another first from Alienware—allows gamers to experience exceptional online gaming."

About Qualcomm Atheros Qualcomm Atheros Inc., the networking and connectivity subsidiary of Qualcomm Incorporated, is a leading provider of wireless and wired technologies for the mobile, networking, computing and consumer electronics markets. The organization is focused on inventing technologies that connect and empower people in ways that are elegant and accessible to all. With its broad connectivity portfolio, Qualcomm Atheros provides its global customer base with high-performance, end-to-end solutions, featuring Wi-Fi®, GNSS Location, Bluetooth®, Ethernet, HomePlug® powerline and passive optical networking (PON) technologies. Qualcomm Atheros leverages its substantial expertise in RF, signal processing, software and networking to deliver highly integrated, low-power, system-level solutions that enable customers to create high-performance, differentiated products. For more information, go to www.qca.qualcomm.com.

Qualcomm Atheros and Killer are trademarks of Qualcomm Atheros Inc. Qualcomm is a trademark of Qualcomm Incorporated. Wi-Fi is a registered trademark of the Wi-Fi Alliance. Bluetooth is a registered trademark of the Bluetooth Special Interest Group. HomePlug is a registered trademark of the HomePlug Powerline Alliance. All other trademarks are the sole property of their respective owners.

In view of larger than originally expected demand for LTE (Long Term Evolution) smartphones, international vendors including Samsung Electronics, LG Electronics and HTC have been worried that their shipments are not enough to meet demand due to short supply of LTE solution chips by Qualcomm, the only provider of LTE chips currently, according to Taiwan-based smartphone supply chain makers.

Verizon Wireless, AT&T and Sprint Nextel in the US market, SK Telecom and KT in the South Korea market as well as NTT DoCoMo in the Japan market are globally the main mobile telecom carriers to promote LTE services. Global demand for LTE smartphones in 2012 is estimated at 60-70 million units.

Qualcomm's short supply of LTE chips is because of insufficient 28nm foundry capacities and the shortage of LTE chips will not be eased until the fourth quarter of 2012, the sources pointed out.

There are 72 commercialized LTE networks in 37 countries around the world at present and there expected to be 134 ones in 57 countries at the end of 2012, the sources cited Global mobile Suppliers Association (GSA) as indicating. Samsung was the largest vendor of LTE smartphones in the first quarter of 2012 with a global market share of 57%, followed by Motorola Mobility with 17% and LG with 13%.

--ARM CEO expects licensees to capture about 10% to 20% of notebook PC market by 2014 or 2015

--CEO thinks Intel's smartphone market share will be limited

--CEO says pricing for ARM-based chips in PCs will be comparable to smartphone chip pricing

By Shara Tibken

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The chief executive of ARM Holdings PLC (ARMH, ARM.LN) expects companies making chips based on its technology to capture a bigger percentage of the notebook PC market than rival Intel Corp. (INTC) will take in smartphones.

The two companies have been trying to expand in each other's markets, with ARM licensees making a push into computers and servers and Intel focusing on smartphones and tablets. ARM processors, used in virtually all mobile devices, have typically had an energy consumption advantage over Intel chips, while Intel's semiconductors, used in the majority of PCs, have traditionally been more powerful.Warren East, in an interview Thursday with Dow Jones, said he expects companies making ARM-based chips to capture about 10% to 20% of the notebook PC market by 2014 or 2015. Conversely, he expects Intel to control about 5% to 10% of the smartphone market within a few years.

East called Intel's first smartphone on the market, the XOLO X900, a "perfectly adequate smartphone," but said there are about 20 other chip suppliers also targeting the highly competitive market. That will make it difficult for any one company to dominate the industry like what has happened in traditional computing.

"It's going to be quite hard for Intel to be much more than just one of several players," East said. "But they'll be a perfectly credible player."

Intel hasn't provided its estimates for phone market share, but Chief Executive Paul Otellini said in a recent interview that the company expects to have a significant presence in the smartphone market and be a major player in mobile in a few years. He also said he expects the industry to consolidate, with only about two to three mainstream mobile chip providers ultimately existing.

ARM doesn't build chips itself but designs processor technology that it licenses to companies such as Qualcomm Inc. (QCOM) and Nvidia Corp. (NVDA). Such power-efficient processors are used in nearly all mobile devices, including those from Apple Inc. (AAPL). But Intel believes it has just about reached power-consumption parity with ARM-based chips, and the first smartphone using its Atom processor recently was released in India.

Intel competes with Advanced Micro Devices Inc. (AMD) in supplying processors to computers and servers, but the two will face competition from ARM-based suppliers later this year when Microsoft Corp. (MSFT) releases its newest version of Windows. One flavor of the operating system, dubbed Windows RT, is the first to be compatible with ARM chips.

East said Windows RT won't have all the functionality of Windows 8, which runs on x86 chips from Intel and AMD, because older applications won't work on the ARM-compatible operating system. He noted ARM-based chip makers won't be addressing or targeting all PC use cases.

"If you look at a lot of consumer PCs, people just want to run an Internet browser, an email package, some Office applications and Adobe [Systems Inc.'s (ADBE)] Photoshop or something like that, and not much else," he said. "Therefore, we can put ARM processors into the heart of PCs to target a lot of the use requirements."

East said the ARM-based chips used in PCs will be significantly cheaper than PC chips from Intel, something that will make them attractive to the computer manufacturers. Typically, smartphone chips cost about $20, he said, compared to the approximate $80 to $200 pricing for Intel's Core line of PC processors. The ARM-based chips in PCs will likely command a slight premium to the smartphone processors, East said.

"It's not as if anyone will pay a lot more money to put an ARM processor in a PC versus in a smartphone," he said. "But selling a chip for $25 instead of $20 is a massive, massive improvement in profitability for the smartphone chip provider."

While Intel's PC chips are more expensive, its Atom line--targeted at mobile devices and low-end PCs--are priced more in line with ARM chips.

Intel's Carvill said Intel expects to be "very price competitive with the ARM licensees" with its Atom chip in consumer devices such as smartphones, tablets and PCs that convert between a tablet and a notebook.

He added that for Windows, Intel chips also bring "tremendous capabilities and expertise in performance, compatibility and power efficiency that will differentiate platforms running Intel architecture from new entrants to the market."

ARM shares trading in New York recently slid 3% to $22.34, down 19% in the year-to-date. Intel, meanwhile, slipped a fraction to $26.39. Its shares are up 8.9% in 2012.

("UPDATE: HTC's EVO 4G LTE Phone Passes US Customs Review - Source" published at 0957 GMT misstated the U.S. is the world's fifth-largest mobile phone market in the first paragraph. The correct version follows.)

-- U.S. mobile carrier Sprint says HTC aims to deliver the phones to customers as soon as Thursday.

By Aries Poon and Lorraine Luk Of DOW JONES NEWSWIRES

TAIPEI (Dow Jones)--Taiwanese mobile phone maker HTC Corp. (2498.TW) could make further inroads into the U.S. market, after a person familiar with the situation said Tuesday HTC's latest smartphone has received approval from U.S. customs, paving the way for its launch in the world's second-largest mobile phone market.

Analysts said HTC's latest EVO 4G LTE smartphones, which use the fast, new fourth-generation LTE network technology, have received strong pre-orders in the U.S., and will be an important part of HTC's strategy to boost sales in one of its key markets.

The person said HTC's latest EVO 4G LTE smartphone has passed the customs, but declined to say whether the phones have reached Sprint, the Taiwanese company's designated network carrier for that model in the U.S.

HTC aims to deliver the phones to customers that have pre-ordered the phone as soon as Thursday, according to Sprint's customer service. "But it's still not definite," the network carrier said.

The latest customs clearance helped ease some concerns about the outlook for HTC's smartphones in the U.S., where the once-strong brand has been struggling to compete against increasingly dominant rivals such as Apple Inc. (AAPL) and Samsung Electronics Co. (005930.SE).

The launch of EVO 4G phone in the U.S., originally scheduled for Friday, was delayed due to an order issued by the International Trade Commission in December that took effect April 19. The ITC order requires all HTC shipments--both existing and upcoming models--to the U.S. after April 19 to be inspected and cleared by U.S. customs before reaching customers.

HTC said last week it had worked around the design of the new phone to avoid the disputed technology that was ruled to be in violation of a patent held by Apple.

HTC earlier said that the inspection could also disrupt future sales of its One series of smartphones, which were released in the U.S. last month before the customs inspection order took effect. While some shipments of One phones have already reached U.S. carriers and have been sold, prolonged customs reviews may result in a shortage of the handsets when inventories run out, the company said.

HTC declined to elaborate on the inventory of One phones in the U.S.

As HTC's sales in the U.S. remain weak, it has been turning to Asia and other emerging markets for growth. But some analysts have questioned the Taiwan company's strategy, saying that it would be tough for HTC, which lacks the cachet of Apple or Samsung, to compete against Chinese handset makers, which offer smartphones at lower prices. Like HTC, Chinese firms such as Huawei Technologies Co. and ZTE Corp. also produce smartphones with advanced features.